Compassion Before Profit In AIDS War

Matthew Yi, Chronicle Staff Writer

Published 4:00 am, Monday, March 26, 2001

2001-03-26 04:00:00 PDT Bombay -- Sitting in his corner office with stacks of medical research papers behind him, the head of India's biggest knockoff-AIDS-drugmaker says he's only doing what his conscience is telling him to do.

"In the area of AIDS and HIV, there are no borders. There's room for everyone to contribute," Yusuf K. Hamied said.

On Feb. 6, Hamied dropped a bombshell on the prescription drug industry with the announcement that his company, Cipla Ltd., would offer a combination of three AIDS drugs at a bargain-basement price.

The company is still waiting for its first buyer, but the offer highlights part of a worldwide movement to provide affordable generic or patented AIDS drugs for millions of people at risk in developing countries.

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Cipla's three-tier pricing scheme per patient per year for his triple-drug AIDS therapy set prices at $1,200 wholesale, $600 to governments and $350 to humanitarian groups such as Doctors Without Borders, that promise to dispense them free to patients.

Under the initial offer, these prices were available only for Cipla's export market. On Feb. 27, Hamied slashed the price of the combination drug for the Indian market by about half, to $600.

Since then, a second Indian firm, Hetero Drugs Ltd., has offered the same three-drug cocktail for $347 a year.

Hamied, an organic chemist, says his offer is not about undercutting competition, but rather doing what's in his heart. AIDS is a "humanitarian problem, not a money problem," he said.

Hamied's Bombay firm has been a thorn in the side of pharmaceutical giants Bristol-Myers Squibb Co. in New York, Glaxo-Wellcome of Britain and Boerhinger Ingelheim GmbH of Germany -- the three companies that own the patents on the anti-retroviral drugs that Cipla makes in generic form. In fact, Cipla's offer set off a round of price-cutting by the drug companies.

In the United States, the three anti-retroviral drugs included in Cipla's offer -- Lamivudine, Stavudine and Nevirapine -- would cost $10,000 to $15,000 per year.

Exploiting India's weak patent laws, Cipla produces its own active ingredients for the AIDS drugs developed by the big multinational firms. Hamied gave an example: "The material can cost 6 cents (per pill). Add another 1 or 2 cents for production. Round it off to about 10 cents total. But in America, it's $4 a tablet."

Even the price that Cipla offers is not low enough in impoverished sub- Saharan Africa -- or even in India, where the annual per capita income hovers around $400. Most Indian patients still would need help from the government, which has started talks with Cipla, or from individual doctors willing to foot the bill themselves, he said.

"A doctor friend told me for every 100 AIDS patients he sees, maybe two can afford the medication," Hamied said.

The first Indian case of AIDS was reported in 1989 in Madras. A decade later, the number of people either with AIDS or HIV positive mushroomed to 3.7 million, according to UNAIDS. By now, the number is certainly higher -- 3,500 new infections every day, estimates Siddharth Dube, an AIDS activist who has worked as a consultant for the World Health Organization and UNAIDS.

No one knows how many of them are getting drug therapy, but both Hamied and AIDS activists say the numbers are very small. "It's a gargantuan problem," Dube said. "Any statistic you look at, it's already a nightmare."

Cipla was started in a rented bungalow in 1935 by Hamied's father, whose portrait is prominently displayed in his son's corner office at the Bombay headquarters.

The company has grown to become one of the world's biggest makers of generic drugs, with 3,500 employees working in 20 factories in India. It produces a range of medications -- from generic pharmaceuticals to antacid tablets and vitamins. AIDS drugs comprise only a small portion of its operation.

The central office is located in the heart of Bombay, the commercial center of India, where 125 scientists work at everything from research and development to analyzing drugs from abroad.

Cipla exports to 130 countries, including the United States, Canada, Ecuador, Britain, Germany, Hungary, South Africa and Saudi Arabia. Its manufacturing facilities have been approved by such regulatory agencies as the U.S. Food and Drug Administration and the Medicines Control Agency in Britain.

Each room in the two-story Bombay facility is packed with some of the latest pharmaceutical technology. Workers in white lab coats, caps and goggles carefully handle beakers and test tubes, while computer monitors spit out data.

The prized possession is a $100,000 Perkin-Elmer FT-IR microscope, which can identify all the ingredients in a pill. Cipla bought one of these machines for each of its 20 facilities about six months ago. "You just put a pill in there, and it'll tell you exactly what it is. You can get the fingerprint of the pill," Hamied said. "It's called reverse engineering."

Cipla has been making the active ingredients for AIDS drugs for nearly a decade to sell abroad, but just started making its own cocktail formulation about two years ago.

When the big pharmaceutical firms showed a few years ago that the combination therapy was effective, Hamied said he decided to provide the drugs at a low cost.

Although he doesn't like to talk about it, AIDS has touched his own life. Hamied says his outlook changed when a childhood friend died two years ago after contracting AIDS during a business trip to Uganda.

Despite his Western rivals' contention that Hamied's pricing for the triple- drug therapy would drive Cipla out of business, he's confident that won't happen. "I'm making money on other products. I won't go bankrupt. No way," he said. "We will essentially break even."

Cipla last year posted $200 million in sales. For the quarter that ended Dec. 31, it saw a 54 percent increase in exports.

Hamied insists that Cipla is not breaking any laws by manufacturing and selling knockoff AIDS drugs. He admits India's patent laws are weak, but says there's good reason.

"Patent laws are need-based. In 1970 . . . we asked ourselves, 'What are India's needs?' We came to the conclusion that India had two main needs: food and health," he said.

That year, the country passed the Indian Patents Act, which allowed companies like Cipla to ignore foreign patents on drugs.

This will likely change beginning in 2005, when the World Trade Organization's agreement on Trade-Related Intellectual Property Rights, or TRIPS, kicks in, guaranteeing 20-year patents. India was required to adhere to the international standards in exchange for WTO membership.

The deadline is another reason why Hamied feels it's imperative for Third World countries coping with the AIDS epidemic to act now.

While admitting talks take time, Hamied is more than frustrated by the response. So far, only Doctors Without Borders has agreed to take advantage of Cipla's offer, although both UNAIDS and the World Health Organization have shown interest.

No matter how low drug prices fall, government subsidies are needed to help AIDS patients in Third World countries, Hamied acknowledged.

"It's very reasonably priced in India already, and even these people cannot afford it," he said. "The government needs to get involved. If the government is conscious of that, we might be able to solve this."

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